Bitcoin (BTC), after enduring a tumultuous fortnight marked by a 21% decline, staged a robust recovery, culminating in a bullish rally to close the previous week. The premier cryptocurrency’s resurgence culminated in the formation of a Doji Hammer candle on its weekly chart, indicating a potential reversal in fortunes. Notably, this upswing has propelled Bitcoin back within its previous trading range of $41,300 to $45,000.
Analyst Insights on Bitcoin’s Reversal
Keith Alan, co-founder of Material Indicators, underscored the significance of this pattern, suggesting an imminent bullish reversal. He emphasized the need for Bitcoin bulls to overcome resistance levels and retest the $44,000 to $45,000 range for meaningful price action.
BTC price, 1-day chart | Source: BTCUSD on TradingView.com
Furthermore, Bitcoin has regained its position above the 20- and 50-day Exponential Moving Averages (EMAs), signaling the possibility of further upward movement.
Anticipation Surrounding FOMC Decision
The impending Federal Open Market Committee (FOMC) meeting holds substantial weight in determining Bitcoin’s short-term trajectory. This meeting could herald significant shifts in the United States Federal Reserve’s monetary policy stance, adding complexity to Bitcoin’s outlook.
The first FOMC meeting of 2024 is Wednesday this week.
Currently, the market gives a ~97% chance that the Fed remain on hold at this meeting, and 46% that they cut at March’s meeting.
Here’s what I am watching for:
– An explicit shift to data dependency (wait and see on cuts,… https://t.co/S2Ny0i0soz— ted (@tedtalksmacro) January 28, 2024
Macro analyst @tedtalksmacro emphasized the pivotal nature of the upcoming FOMC meeting. While market expectations lean towards maintaining the status quo, attention is focused on potential adjustments to Quantitative Tightening (QT) policies and the Fed’s approach to inflation nearing its 2% target.
Implications for Bitcoin
Renowned crypto analyst @ColdBloodShill highlighted the historical inverse correlation between the Dollar Index (DXY) and Bitcoin. He suggested that a potential decline in the DXY post-FOMC could catalyze Bitcoin’s ascent towards the $45,000 threshold.
FOMC marked the local top of the DXY | Source: X @ColdBloodShill
Additionally, changes in QT policy indicating increased money supply could serve as a significant catalyst for Bitcoin, reinforcing its status as a store of value amidst inflation concerns.
Bitcoin’s resurgence to $45,000 amid anticipation of the FOMC decision underscores its resilience in volatile market conditions. As investors await the outcome of the meeting, Bitcoin’s trajectory remains intricately linked to macroeconomic factors and monetary policy shifts.
